It will be too early for Iran to discuss freezing crude output when the world’s biggest producers meet later this month in Algiers, according to an official from the Iran’s state-oil company.
Iran will be ready to decide on capping production once output reaches the level it was before international sanctions were imposed on the country, Mohsen Ghamsari, director for international affairs at state-run National Iranian Oil Company, said in an interview in Singapore Thursday, Bloomberg reported.
“As soon as we come back to the pre-sanction levels, we will be ready to discuss quotas and level of production. Four million barrels a day production level is not very far from our hands. I hope by end-2016 or early next year, we would be able to reach that level.”
Iran’s position limits the options when producers meet to discuss how to address the persistent crude glut that is weighing on prices. While its comments rule out discussing a production freeze, they may still leave the door open for other ways to rebalance the market such as agreeing on a supply ceiling.
Iraq has given other OPEC members a level at which it can cap its output, according to the head of the state oil company. A previous proposal to limit production collapsed in April when Saudi Arabia insisted on Iran’s participation.
Oil at $40 to $50 a barrel is “reasonable” and the market is in “stable condition,” Ghamsari said. NIOC can survive with those prices because its production cost is less than $10 a barrel, he said.
“Don’t expect anything of substance to be agreed on output at the Algiers meeting,” said Victor Shum, Singapore-based vice president at industry consultant IHS Inc. “It will be a non-event and any attempts to manage output won’t happen. It will be a dud but that’s not a surprise.”
